Results Include Impact of $5.5 million Pre-Tax Restructuring
Charge; Excluding Charge, Fourth Quarter Adjusted EPS Exceeds
Guidance The Yankee Candle Company, Inc. ("Yankee" or the
"Company") (NYSE:YCC), the leading designer, manufacturer,
wholesaler and retailer of premium scented candles, today announced
financial results for the fourth quarter and fiscal year ended
December 31, 2005 ("fiscal 2005"). Total sales for the fourth
quarter were $236.9 million, an 8% increase over the year ago
quarter. Total sales for fiscal 2005 were $601.2 million, an 8%
increase over fiscal 2004. Earnings per common share on a diluted
basis for the fourth quarter of 2005 increased 1% to $1.01 from
$1.00 for the prior year quarter. Earnings per common share on a
diluted basis for the full fiscal year 2005 increased 3% to $1.73
from $1.68 for the prior fiscal year. "In the fourth quarter,
Yankee Candle grew total revenues, segment profit and earnings per
share versus the prior year period and delivered earnings per share
before the restructure that exceeded the high end of our guidance
despite a very promotional holiday environment and wax
allocations," said Craig Rydin, Chairman and Chief Executive
Officer. "We had strong revenue growth in both our Retail and
Wholesale Divisions, each of which was within or above the guidance
we provided in our October call. Key among our achievements in the
quarter was the opening of our 2nd flagship store in Williamsburg,
Virginia, which has been very well received and significantly
exceeded its sales plan in the fourth quarter. I want to thank all
of our employees for a good job this holiday season." During the
fourth quarter of fiscal 2005, the Company initiated a previously
announced restructuring plan to close 17 underperforming stores and
re-invest in talent and other strategic growth initiatives. In
connection with this restructuring plan, a pre-tax charge of
approximately $5.5 million was recorded in the fourth quarter of
fiscal 2005. Included in the restructuring charge was approximately
$2.4 million related to lease termination costs, approximately $2.5
million related to non-cash fixed assets write-offs and
approximately $0.6 million in employee related and other costs. As
of the date of this press release seven of the 17 underperforming
stores have been closed. The Company expects to close the remaining
ten locations before the end of the first quarter of fiscal 2006.
Excluding the impact of the fourth quarter restructuring charge of
$5.5 million, adjusted earnings per common share on a diluted basis
for the fourth quarter of 2005 increased 9% to $1.09 from $1.00 for
the prior year quarter; and for the full fiscal year 2005 increased
8% to $1.81 from $1.68 for the prior fiscal year. For a
reconciliation of these results with those reported above including
the impact of the restructuring charge, please see the Statements
attached to and incorporated within this press release. Revenue
Highlights: -- Wholesale sales were $92.4 million in the fourth
quarter, a 10% increase over the year ago quarter; and Wholesale
comparable sales increased 2%. For fiscal 2005, Wholesale sales
were $297.1 million, a 10% increase over fiscal 2004; and Wholesale
comparable sales increased 2% for fiscal 2005. -- Retail sales were
$144.5 million in the fourth quarter, a 7% increase over the fiscal
2004 fourth quarter. Consumer Direct increased 18% over the fiscal
2004 fourth quarter. Comparable sales in the 335 retail stores that
have been open more than one year and Consumer Direct decreased 3%
and retail comparable store sales (excluding Consumer Direct)
decreased 4% in the quarter. For fiscal 2005, retail sales were
$304.0 million, a 7% increase over fiscal 2004. Comparable sales in
the 335 stores that have been open more than one year and Consumer
Direct decreased 2% for fiscal 2005. Retail comparable store sales
(excluding Consumer Direct) decreased 4% for fiscal 2005. Income
Statement Highlights: Craig Rydin continued, "Our gross profit and
income from operations were affected primarily by higher energy
costs that increased our wax and freight costs, as well as by
higher production costs incurred as we worked around wax
allocations, and to a lesser extent by the promotional environment
this past holiday season. We were able to offset some of this
impact by effectively managing fourth quarter G & A to a level
favorable to our guidance." -- Gross profit increased 5% to $140.9
million for the fourth quarter ended December 31, 2005 as compared
to the prior year quarter; and increased 6% to $343.7 million for
fiscal 2005 compared to fiscal 2004. As a percentage of sales,
gross profit decreased to 59.5% for the fourth quarter ended
December 31, 2005 compared to 61.5% for the fourth quarter ended
January 1, 2005; and decreased to 57.2% for fiscal year 2005
compared to 58.4% for fiscal year 2004. -- Income from operations
for the fiscal 2005 fourth quarter decreased 7% to $73.3 million,
from $79.0 million for the prior year quarter. Excluding the
restructuring charge, adjusted income from operations for the
fiscal 2005 fourth quarter decreased slightly to $78.8 million. --
Income from operations for fiscal 2005 decreased 3% to $134.8
million, from $139.3 million operating profit for fiscal 2004.
Excluding the restructuring charge, adjusted income from operations
for fiscal year 2005 increased 1% to $140.3 million. -0- *T
Reconciliation of Non-GAAP Measures (in thousands) (Unaudited)
Thirteen Thirteen Fifty-Two Fifty-Two Weeks Weeks Weeks Weeks Ended
Ended Ended Ended December 31, January 1, December 31, January 1,
2005 2005 2005 2005 ---------- ---------- ---------- ----------
Income from operations $ 73,287 $ 79,002 $134,759 $139,327
Restructuring charge 5,546 - 5,546 - ---------- ----------
---------- ---------- Adjusted Income from operations $ 78,833 $
79,002 $ 140,305 $139,327 ========== ========== ==========
========== % change from prior year 0% 1% *T Other Highlights: --
The Company continues to return capital back to its shareholders
through its share repurchase program. In the fourth quarter, the
Company repurchased and retired 2,610,850 shares of its Common
Stock at a total cost of approximately $65.0 million. In the fiscal
year of 2005, it repurchased and retired 6,543,234 shares of its
Common Stock, or 14% of its beginning year common shares
outstanding, at a total cost of $185.0 million. Approximately $65.0
million remains available for future purchases pursuant to its
stock repurchase program announced on July 27, 2005. Forecast
Highlights: Mr. Rydin continued, "We made progress during the
fourth quarter on our short-term initiatives and are putting the
finishing touches on the implementation of our strategic plan,
which we believe will set the stage for profitable growth in 2006
and beyond. For 2006, our priorities on the top line are to
stimulate total sales growth through improved sales and marketing,
faster and greater innovation, and selective channel expansion to
gain market share. We also are focused on driving long-term
profitability by raising our efficiency level, removing cost where
possible, and further orienting our culture toward
performance-based objectives. While we are still in the first stage
of this transition, we believe we are making progress on all
fronts." The Company also provided its sales and EPS guidance for
2006, excluding any impact of additional share repurchases. -- For
the full year and first quarter of 2006, the Company expects
approximately 6%-8% total sales growth. For the full year the
Company expects 11%-14% growth in adjusted net income per diluted
common share, or $2.01 - $2.07, including $0.24 - $0.25 in the
first quarter. The diluted EPS growth for the full year would be
16% - 20%, inclusive of the restructure charge in 2005. The diluted
earnings per share guidance incorporates the net benefit (higher
interest expense on revolver borrowings and fewer shares
outstanding) of share repurchase activity in the twelve months of
fiscal 2005. Earnings Conference Call: The Company will host a
conference call to be broadcast via the Internet at 11:00 a.m.
(EST) this morning to more fully discuss fiscal 2005 fourth quarter
and full year results and our outlook for fiscal 2006. This call is
being webcast by CCBN and can be accessed at The Yankee Candle
Company's web site at www.yankeecandle.com. Click on the "About Us"
link, and then select the "Investor Information" link. Enter your
registration information, 10 minutes prior to the start of the
conference. The Yankee Candle Company, Inc. is the leading
designer, manufacturer, wholesaler and retailer of premium scented
candles in the giftware industry. Yankee has a 36 year history of
offering distinctive products and marketing them as affordable
luxuries and consumable gifts. The Company sells its products
through a North American wholesale customer network of
approximately 16,400 store locations, a growing base of Company
owned and operated retail stores (390 located in 42 states as of
December 31, 2005), direct mail catalogs, its Internet website
(www.yankeecandle.com), international distributors and to a
European wholesale customer network of approximately 2,200 store
locations (through its distribution center located in Bristol,
England). Non-GAAP Information In addition to disclosing results
determined in accordance with generally accepted accounting
principles, or GAAP, Yankee Candle also discloses adjusted, or
non-GAAP, results of operations that exclude certain items. By
disclosing this non-GAAP information, management intends to provide
investors with additional information to further analyze Yankee
Candle's performance, core results and underlying trends. In order
to better assess operating trends, management utilizes a measure of
adjusted net income and adjusted diluted net income per common
share on a non-GAAP basis that excludes for the applicable periods
a restructuring charge, net of tax effects related to the closing
of 17 underperforming stores and re-investment in talent and other
strategic growth initiatives. Excluded charges are considered to be
non-recurring and non-operational in the applicable period.
Management believes adjusted net income provides useful
supplemental information to management and investors regarding the
performance and underlying trends of Yankee Candle's business
operations and facilitates comparisons to its historical operating
results. Management uses this information internally for
forecasting, budgeting and evaluating the effectiveness of Yankee
Candle's operational strategies. Management believes it is
important to provide investors with the same metrics used by
management to measure core operating performance, which assists
investors in analyzing the underlying trends in Yankee Candle's
business over time. Non-GAAP information should not be viewed as a
substitute for, or superior to, net income or other data prepared
in accordance with GAAP as measures of Yankee Candle's
profitability or liquidity. Users of this financial information
should consider the types of events and transactions for which
adjustments have been made. See the tables to this press release
for a reconciliation of non-GAAP amounts to amounts reported under
GAAP. This press release contains certain information constituting
"forward-looking statements" for purposes of the safe harbor
provisions of The Private Securities Litigation Reform Act of 1995.
Forward-looking statements include but are not limited to the
statements contained herein with respect to management's current
estimates of the Company's financial and operating results for
Fiscal 2006, and the first quarter thereof, the growth initiatives
and specific actions discussed above and their impact on the
Company's future operating results, and any other statements
concerning the Company's or management's plans, objectives, goals,
strategies, expectations, estimates, beliefs or projections, or any
other statements concerning future performance or events. Actual
results could differ materially from those indicated by these
forward-looking statements as a result of various risks and
uncertainties, including but not limited to the following: the
current economic conditions in the United States as a whole and the
continuing weakness in the retail environment; the risk that we
will be unable to maintain our historical growth rate; the effects
of competition from others in the highly competitive giftware
industry; our ability to anticipate and react to industry trends
and changes in consumer demand; our dependence upon our senior
executive officers; the risk of loss of our manufacturing and
distribution facilities; the impact on our stock price of seasonal,
quarterly and other fluctuations in our business; the risk of any
disruption in wax supplies; and other factors described or
contained in the Company's most recent Quarterly Report on Form
10-Q or Annual Report on Form 10-K on file with the Securities and
Exchange Commission. Any forward-looking statements represent our
views only as of today and should not be relied upon as
representing our views as of any subsequent date. While we may
elect to update certain forward-looking statements at some point in
the future, we specifically disclaim any obligation to do so even
if experience or future events may cause the views contained in any
forward-looking statements to change. -0- *T The Yankee Candle
Company, Inc. and Subsidiaries Consolidated Statements of
Operations (in thousands, except per share data) (Unaudited)
Thirteen Weeks Thirteen Weeks Ended Ended December 31, 2005 January
1, 2005 ----------------- ----------------- Sales: Retail $144,471
60.99% $134,867 61.62% Wholesale 92,407 39.01% 83,995 38.38%
----------------- ----------------- Total sales 236,878 100.00%
218,862 100.00% Cost of sales 95,969 40.51% 84,346 38.54%
----------------- ----------------- Gross profit 140,909 59.49%
134,516 61.46% Selling expenses: Retail 40,339 27.92%(A) 37,595
27.88%(A) Wholesale 6,334 6.85%(B) 4,310 5.13%(B) -----------------
----------------- Total selling expenses 46,673 19.70% 41,905
19.15% General & administrative expenses 15,403 6.50% 13,609
6.22% Restructuring charge 5,546 2.34% - 0.00% -----------------
----------------- Income from operations 73,287 30.94% 79,002
36.10% Interest income (6) 0.00% (4) 0.00% Interest expense 2,441
1.03% 1,091 0.50% Other income (302) -0.13% (1,380) -0.63%
----------------- ----------------- Income before provision for
income taxes 71,154 30.04% 79,295 36.23% Provision for income taxes
27,750 11.71% 31,322 14.31% ----------------- ----------------- Net
income $ 43,404 18.32% $ 47,973 21.92% =================
================= Basic earnings per share $ 1.01 $ 1.01 ==========
========== Diluted earnings per share $ 1.01 $ 1.00 ==========
========== Dividends per share $ 0.13 N/A ========== Weighted avg.
basic shares outstanding 42,776 47,456 Weighted avg. diluted shares
outstanding 43,083 47,867 Reconciliation of Non-GAAP Measures: Net
Income, as reported $ 43,404 $ 47,973 Restructuring charge, net of
tax 3,383 - ---------- ---------- Adjusted net income $ 46,787 $
47,973 ========== ========== Net income, per common share, diluted
as reported $ 1.01 $ 1.00 Restructuring charge, net of tax 0.08 -
---------- ---------- Adjusted net income per common share, diluted
$ 1.09 $ 1.00 ========== ========== Fifty-Two Weeks Fifty-Two Weeks
Ended Ended December 31, 2005 January 1, 2005 -----------------
------------------ Sales: Retail $304,057 50.58% $283,482 51.15%
Wholesale 297,124 49.42% 270,720 48.85% -----------------
------------------ Total sales 601,181 100.00% 554,202 100.00% Cost
of sales 257,455 42.82% 230,519 41.59% -----------------
------------------ Gross profit 343,726 57.18% 323,683 58.41%
Selling expenses: Retail 126,838 41.72%(A) 116,101 40.96%(A)
Wholesale 19,217 6.47%(B) 15,232 5.63%(B) -----------------
------------------ Total selling expenses 146,055 24.29% 131,333
23.70% General & administrative expenses 57,366 9.54% 53,023
9.57% Restructuring charge 5,546 0.92% - 0.00% -----------------
------------------ Income from operations 134,759 22.42% 139,327
25.14% Interest income (23) 0.00% (13) 0.00% Interest expense 7,250
1.21% 4,152 0.75% Other income (502) -0.08% (1,488) -0.27%
----------------- ------------------ Income before provision for
income taxes 128,034 21.30% 136,676 24.66% Provision for income
taxes 49,933 8.31% 53,987 9.74% -----------------
------------------ Net income $ 78,101 12.99% $ 82,689 14.92%
================= ================== Basic earnings per share $
1.75 $ 1.70 ========== ========== Diluted earnings per share $ 1.73
$ 1.68 ========== ========== Dividends per share $ 0.25 N/A
========== Weighted avg. basic shares outstanding 44,622 48,749
Weighted avg. diluted shares outstanding 45,053 49,136
Reconciliation of Non-GAAP Measures: Net Income, as reported $
78,101 $ 82,689 Restructuring charge, net of tax 3,383 - ----------
---------- Adjusted net income $ 81,484 $ 82,689 ==========
========== Net income, per common share, diluted as reported $ 1.73
$ 1.68 Restructuring charge, net of tax 0.08 - ----------
---------- Adjusted net income per common share, diluted $ 1.81 $
1.68 ========== ========== ------------------------------ (A)
Retail selling expenses as a percentage of retail sales. (B)
Wholesale selling expenses as a percentage of wholesale sales. The
Yankee Candle Company, Inc. And Subsidiaries Condensed Consolidated
Balance Sheets (in thousands) ASSETS December 31, January 1, 2005
2005 ---------- ---------- (unaudited) Current Assets: Cash and
cash equivalents $ 12,655 $ 36,424 Accounts receivable, net 42,546
28,231 Inventory 55,528 46,901 Prepaid expenses and other current
assets 9,060 8,112 Deferred tax assets 6,734 3,876 ----------
---------- Total Current Assets 126,523 123,544 Property, Plant And
Equipment, net 139,089 126,365 Marketable Securities 2,223 1,499
Deferred Financing Costs 593 451 Deferred Tax Assets 73,975 84,697
Other Assets 12,731 9,803 ---------- ---------- Total Assets $
355,134 $ 346,359 ========== ========== LIABILITIES AND
STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 21,068
$ 20,246 Accrued payroll 14,319 14,492 Accrued income taxes 20,828
26,264 Other accrued liabilities 34,326 18,435 ----------
---------- Total Current Liabilities 90,541 79,437 Deferred
Compensation Obligation 2,418 1,659 Long-Term Debt 178,000 75,000
Deferred Rent 16,031 10,600 Stockholders' Equity 68,144 179,663
---------- ---------- Total Liabilities And Stockholders' Equity $
355,134 $ 346,359 ========== ========== The Yankee Candle Company,
Inc. February 15, 2006 Earnings Release Supplemental Data Quarter
Year to Total Date ---------- ---------- -------- Retail Stores 23
53 390 Wholesale Customer Locations - North America 100 784 16,384
Wholesale Customer Locations - Europe 102 12 2,212 Square Footage -
Gross 93,632 140,611 794,408 Square Footage - Selling 65,225
102,605 620,979 Total Company Comp Sales Change % -1% 0% Wholesale
Comp Sales Change % 2% 2% Retail Comp Store Sales Change % -4% -4%
Retail Comp Store Count 335 - 335 Retail Comp Store Sales Change %,
excl. S.Deerfield -4% -3% Retail Comp Store & Consumer Direct
Sales Change % -3% -2% Sales per Square Foot (1) - $560 Store Count
- 336 Average store square footage, gross (2) - 1,661 Average store
square footage, selling (2) - 1,285 Gross Profit (3) Retail $
$97,439 $202,384 Retail % 67.5% 66.6% Wholesale $ $43,470 $141,342
Wholesale % 47.0% 47.6% Segment Profit (3) Retail $ $57,099 $75,546
Retail % 39.5% 24.9% Wholesale $ $37,137 $122,125 Wholesale % 40.2%
41.1% Depreciation & Amortization (3) $6,435 $24,788 Inventory
per Store $35,000 - Inventory Turns 6.2 4.7 (4) Capital
Expenditures (3) $16,836 $39,180 Shares Outstanding 40,962,696 -
Weighted avg diluted shares in EPS calculation 43,083,000 - (1)
Trailing 12 months, stores open for full 12 months, excluding S.
Deerfield Flagship Store and stores closed during 2005. (2)
Excludes S. Deerfield and Williamsburg, VA Flagship stores. (3)
Dollars in thousands. (4) Rolling four quarters. *T
Yankee Cdle (NYSE:YCC)
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Yankee Cdle (NYSE:YCC)
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